CODE OF BUSINESS CONDUCT AND ETHICS
AZURE MIDSTREAM PARTNERS GP, LLC
The Board of Directors (the “Board”) of Azure Midstream Partners GP, LLC (the “Company”), acting on behalf of the Company in its capacity as the general partner of Azure Midstream Partners, LP (the “Partnership” and, together with the Company, the “Partnership Group”) has adopted this Corporate Code of Business Conduct and Ethics (this “Code”), which provides basic principles and guidelines to assist directors, officers and other employees in complying with the legal and ethical requirements governing the Partnership’s business conduct. This Code covers a wide range of business practices and procedures but does not cover every issue that may arise.
The Partnership Group reserves the right to add to, modify and rescind this Code or any portion of it at any time. This Code governs in the event of any conflict or inconsistency between this Code and any other materials distributed by the Partnership Group. If a law conflicts with a policy in this Code, you must comply with the law.
You should read this Code carefully, ask questions of the Partnership Group’s Chief Financial Officer, and promptly sign and return the certification attached as Annex A, acknowledging receipt of this Code to:
Azure Midstream Partners, LP
I. Statement of Principles
The Partnership’s fundamental policy is to conduct its business with honesty and integrity in accordance with the highest legal and ethical standards. The Partnership and its directors, officers and other employees must comply with all applicable legal requirements of the United States and each other country in which the Partnership conducts business.
This Code provides guidance for specific situations that may arise. However, each director, officer and employee has the responsibility to exercise good judgment so as to act in a manner that will reflect favorably upon the Partnership and the individual.
The Partnership Group’s directors, officers and other employees must comply with the spirit as well as the letter of this Code. Directors, officers and other employees must not attempt to achieve indirectly, through the use of agents or other intermediaries, what is prohibited directly by this Code.
Each employee must become familiar with and agree to comply with this Code as a condition of such employee’s employment. All officers and other employees, regardless of level, must be provided with a copy of this Code at the time their employment commences with the Partnership Group; provided, however, that individuals already employed by the Partnership Group at the time of the adoption of this Code must be provided with a copy of this Code shortly after its adoption. All managers are responsible both for ensuring that all employees under their supervision, regardless of level, are familiar with this Code and for promoting compliance with this Code.
Each director must become familiar with and agree to comply with this Code. All directors must be provided with a copy of this Code at the time of their appointment or election to serve on the Board.
The following persons must execute compliance certificates substantially in the form of Annex A to this Code:
As provided above, each officer and other employee must become familiar with and agree to comply with this Code as a condition of such person’s employment. Therefore, each new officer and other employee must execute the Periodic Compliance Certificate upon employment. In addition, each newly elected director must execute the Periodic Compliance Certificate upon election or appointment to serve on the Board as set forth above.
The Partnership Group’s Chief Financial Officer is responsible for ensuring that all directors, officers and other appropriate employees of the Partnership Group execute and return the Periodic Compliance Certificate to the Partnership Group’s Chief Financial Officer or another officer designated by the Partnership Group’s Chief Financial Officer.
Association with Unaffiliated Enterprises
The Partnership Group’s employees associated with enterprises not controlled by the Partnership (including vendors, suppliers, contractors, lawyers and accountants) must be guided in their conduct by this Code’s provisions. Such persons must attempt to influence those enterprises to conduct their activities in conformity with all applicable laws and this Code and must report violations of this Code to the Partnership Group’s Chief Financial Officer.
Letter to Vendors, Suppliers and Contractors
The Partnership must periodically send to its significant vendors, suppliers and contractors a letter that:
Directors, officers or other employees who have questions on how to proceed or interpret this Code should consult their supervisor, the Partnership Group’s Chief Financial Officer or any other person(s) designated by the Board to supervise the application of this Code. In addition, please see Annex B for a listing of compliance procedures.
Violation of Policy
Compliance with this Code is essential. Violations will result in disciplinary action, including dismissal of any officer or other employee where warranted.
III. Conflicts of Interest
A conflict of interest occurs when an individual’s private interest interferes in any way with the interests of the Partnership as a whole. This situation can arise when a director, officer or other employee takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest also arise when a director, officer or other employee, or a member of such person’s family or household, receives improper personal benefits as a result of the director’s, officer’s or other employee’s position with the Partnership Group. A conflict of interest is deemed to exist whenever, as a result of the nature or responsibilities of his or her relationship with the Partnership Group, a director, officer or other employee is in a position to further any personal financial interest or the financial interest of any member of such person’s family.
No director, officer or other employee, regardless of level, is permitted to engage in any business or conduct or enter into any agreement or arrangement that would give rise to actual or potential conflicts of interest. Directors, officers and other employees should not permit themselves to be placed in a position that might give rise to the appearance that a conflict of interest has arisen.
While it is not possible to describe all circumstances where a conflict of interest involving a director, officer or employee exists or may exist, the following situations may involve actual or potential conflicts of interest:
The following situations should not be considered conflicts of interest:
These examples are given only to guide directors, officers and other employees in making judgments about conflicts of interest. If any director, officer or employee finds himself or herself in a situation where a conflict of interest exists or may exist, he or she should immediately report the matter as provided below.
Reporting Conflicts of Interest Involving Non-Officer Employees
Actual or potential conflicts of interest involving a non-officer employee, or a member of such person’s immediate family, must be reported in writing by the affected person (or by others having knowledge of the existence of the actual or potential conflicts of interest) to the employee’s immediate supervisor, who shall consult with the Partnership Group’s Chief Financial Officer to determine whether a conflict of interest actually exists and to recommend measures to be taken to neutralize the adverse effect of the conflict of interest reported, if such measures are available or appropriate under the circumstances. This procedure will be applied so as to minimize its effect on the personal affairs of employees consistent with the protection of the Partnership’s interests. The matter may also be referred to the Board for its approval or rejection.
Reporting Conflicts of Interest Involving Directors or Officers
An actual or potential conflict of interest involving a director or officer, or a member of such person’s immediate family, must be reported by the affected person (or by others having knowledge of the existence of the actual or potential conflict of interest) to the Partnership Group’s Chief Financial Officer, who shall promptly disclose the possible conflict of interest to the Board at the earliest time practicable under the circumstances. The possible conflict of interest will be made a matter of record, and the Board will determine whether the possible conflict of interest indeed constitutes a conflict of interest. The Board’s approval will be required prior to the consummation of any proposed transaction or arrangement that is determined by the Board to constitute a conflict of interest.
Any member of the Board or any officer having a possible conflict of interest in any proposed transaction or arrangement is not permitted to vote (in the case of a member of the Board) or use his or her personal influence on the matter being considered by the Board. Any member of the Board having a possible conflict of interest is not counted in determining the quorum for consideration and vote on the particular matter. Finally, any member of the Board or any officer having a possible conflict of interest must be excused from any meeting of the Board during discussion (subject to the exception set forth in the paragraph below) and vote on the particular matter (in the case of an interested director). The minutes of the Board meeting should reflect the disclosure, the absence from the meeting of the interested director or officer, the abstention from voting (in the case of an interested director) and the presence of a quorum. The proposed transaction or arrangement is considered approved if it receives the affirmative vote of a majority of the disinterested members of the Board (even though the disinterested members are less than a quorum).
The foregoing requirements do not prohibit the interested director or officer from briefly stating his or her position on the matter or from answering pertinent questions of the disinterested members of the Board, as the interested director’s knowledge may be of assistance to the other Board members in their consideration of the matter.
IV. Record Keeping
Internal Accounting Controls. The Partnership Group’s principal executive officer and principal financial officer are responsible for implementing and maintaining a system of internal accounting controls sufficient to provide reasonable assurances that:
Employee Conduct. No director, officer or other employee of the Partnership Group is permitted to willfully, directly or indirectly:
Director, officers and other employees must exercise reasonable due diligence in order to avoid the events described above. If an employee believes that the Partnership’s books and records are not being maintained in accordance with these requirements, the employee should follow the procedures outlined in the Partnership’s Policy for Employee Complaint Procedures for Accounting and Compliance Matters.
Payments of Amounts Due to Customers, Agents or Distributors
The Partnership and its directors, officers and other employees must comply with the United States Foreign Corrupt Practices Act, which makes it illegal for U.S. companies to win, retain or direct business by offering, paying or approving payments to foreign government workers, political parties or their officials.
V. Use of Partnership Property and Resources
The use of any Partnership funds or assets for any unlawful or improper purpose is prohibited. All employees should endeavor to protect the Partnership’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Partnership’s profitability. Any suspected incident of fraud or theft should be reported immediately for investigation. Partnership equipment should not be used for non-business related purposes, though incidental personal use may be permitted (such as occasional use of the Partnership’s stationery, supplies, copying facilities or telephone when the cost to the Partnership is insignificant).
The obligation of employees to protect the Partnership’s assets includes an obligation to protect the Partnership’s proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information violates Partnership policy and could also be illegal and result in civil or criminal penalties.
Without the written consent of the Board, directors, officers and other employees are prohibited from taking for themselves an opportunity that is (1) a potential transaction or matter that may be an investment or business opportunity or prospective economic or competitive advantage in which the Partnership could reasonably have an interest or expectancy or (2) discovered through the use of corporate property, information or position. In addition, directors, officers and other employees are prohibited from using corporate property, information or position for personal gain and competing with the Partnership directly or indirectly. Directors, officers and other employees of the Partnership Group owe a primary duty to the Partnership to advance its legitimate interests when the opportunity to do so arises.
VI. Business and Trade Practices
Directors, officers and other employees should endeavor to deal fairly with the Partnership’s customers, suppliers, competitors and employees. No director, officer or other employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other practice involving unfair dealing.
Directors, officers and other employees shall maintain the confidentiality of information entrusted to them by the Partnership or its customers, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that, if disclosed, might be of use to competitors or harmful to the Partnership or its customers. Confidential information also includes written material provided and information discussed at all meetings of the Board or any committee thereof and all information that is learned about the Partnership’s suppliers and customers that is not in the public domain. The obligation to preserve confidential information continues even after employment or agency with the Partnership ends. Any documents, papers, records, or other tangible items that contain trade secrets or proprietary information are the Partnership’s property.
The Partnership is committed to conducting its business in compliance with applicable health, safety and environmental laws, rules and regulations in a manner that has the highest regard for the health and safety of human life and the environment. Each employee has the responsibility for maintaining a healthy, safe and environmentally-friendly workplace by following health, safety and environmental laws, rules and regulations and reporting accidents, injuries and unsafe equipment, practices or conditions.
Directors, officers and other employees should be aware that health and safety laws may provide for significant civil and criminal penalties against individuals and the Partnership for the failure to comply with applicable requirements. Accordingly, each director, officer and other employee must comply with all applicable safety and health laws, rules and regulations, including occupational safety and health standards.
Directors, officers and other employees should be aware that environmental laws may provide for significant civil and criminal penalties against individuals and/or the Partnership for failure to comply with applicable requirements. Accordingly, each director, officer and other employee must comply with all applicable environmental laws, rules and regulations.
Employees should report to work in a condition allowing them to perform their duties free from the influence of drugs, alcohol or other controlled substances. The use of illegal drugs in the workplace will not be tolerated.
Violence and threatening behavior are not permitted.
It is the Partnership’s policy to cooperate with all governmental investigative authorities. Each director, officer and other employee shall retain any record, document or tangible object of the Partnership that is known to be the subject of an investigation or litigation.
It is a violation of this Code for any director, officer or other employee to knowingly alter, destroy, mutilate, conceal, cover up, falsify or make a false entry in any record, document or tangible object with the intent to impede, obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any state, federal department or agency or any bankruptcy, or in relation to or contemplation of any such matter or case.
VII. Preparation and Certification of 1934 Act Reports
The Partnership’s Annual Report on Form 10-K shall contain an internal control report that (1) states the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; (2) contains an assessment, as of the end of the Partnership’s most recent fiscal year, of the effectiveness of the Partnership’s internal control structure and procedures for financial reporting; (3) includes a statement that the Partnership’s independent registered public accounting firm has issued a report on the Partnership’s internal controls and procedures for financial reporting; (4) includes the report of the Partnership’s independent registered public accounting firm; and (5) otherwise complies with Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder by the SEC.
It is the Partnership’s policy to promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Partnership files with, or submits to, the SEC and in other public communications made by the Partnership. The Disclosure Committee shall oversee the Partnership’s internal controls and will take the actions that are necessary and appropriate to fulfill the Partnership’s disclosure requirements. The Disclosure Committee will report to senior management, including the Partnership’s principal executive officer and principal financial officer. The Disclosure Committee shall consider the materiality of information and determine disclosure obligations on a timely basis.
The Partnership Group’s principal executive officer and principal financial officer shall make the certifications required by Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, the text of which are set forth in Item 601(b)(31) and (32) of Regulation S-K promulgated by the SEC.
VIII. Employment Practices and Work Environment
All directors, officers and other employees, regardless of position, shall do their best to work together to meet the following objectives:
In addition to the objectives set forth above, members of the management team are expected to:
The Partnership values the diversity of its employees and is committed to providing an equal opportunity in all aspects of employment to all employees without regard to race, color, gender, religion, age, national origin, citizenship status, military service or reserve or veteran status, sexual orientation or disability. Directors, officers and other employees should use reasonable efforts to seek business partners for the Partnership that do not discriminate in hiring or in their employment practices, and who make decisions about hiring, salary, benefits, training opportunities, work assignments, advancement, discipline, termination and retirement solely on the basis of a person’s ability to perform the tasks required by their position.
Freedom of Association
The Partnership recognizes and respects the right of employees to exercise their lawful rights of free association, including joining or electing not to join any association. The Partnership expects its business partners to also adhere to these principles.
The Partnership will not condone any type of harassment, abuse or punishment, whether corporal, mental or physical, of an employee by a director, officer or other employee or any partner, customer or supplier of the Partnership.
IX. Political Contributions
The Partnership encourages the personal and financial participation of its directors, officers and other employees in federal, state and local elective processes. Federal law prohibits the Partnership from making any direct contribution or expenditure to a candidate or candidate’s campaign in any federal election. Although there are exceptions, most states also prohibit the use of corporate treasury funds to influence state elections.
It is the Partnership’s policy not to make direct or indirect political contributions in support of any party or candidate in any U.S. election, whether federal, state or local, except as stated above. For the purposes of this policy, the purchase of tickets for dinners, advertising in political program booklets, use of the Partnership’s duplicating facilities, compensated employee activity, employee contributions reimbursed through expense accounts and similar donations in kind are considered political contributions. These are merely examples of political contributions, and the preceding list is not intended to be exhaustive.
The Partnership may on occasion contribute to state and local office candidate committees and to state and local initiatives or referendum campaigns where the Partnership’s interests are directly involved and where permitted by state and local law. Proposed political contributions require a brief description of the purpose of the proposed contribution and a written legal opinion that confirms that the proposed contribution is lawful under all applicable laws. The documentation for proposed contributions shall be approved in advance by the Partnership’s [principal executive officer or the Chairman of the Board] to ensure full compliance with applicable state and local regulations and reporting requirements.
To the extent permitted by law, the Partnership’s resources may be used to establish and administer a political action committee or separate segregated fund. All proposed activities shall be submitted for review and approval by the Board prior to their implementation.
In countries where corporate political contributions are permitted by law and encouraged by local custom, contributions may be appropriate and are permitted where approved by the proper corporate officer and the Board.
X. Reporting Violations
The Partnership proactively promotes ethical behavior.
Directors, officers and other employees should report violations of applicable laws, rules and regulations (including, without limitation, the listing requirements of the New York Stock Exchange (“NYSE”)), this Code or any other code, policy or procedure of the Partnership (including, without limitation, the Partnership’s Financial Code of Ethics) to appropriate personnel or follow the procedures outlined in the Partnership’s Policy for Employee Complaint Procedures for Accounting and Compliance Matters (as appropriate).
Directors, officers and other employees are expected to cooperate in internal investigations of misconduct.
XI. Waivers of this Code
Any waiver of a provision of this Code may be made only by the Board or a committee thereof. Any waiver for directors or executive officers will be promptly disclosed if and as required by law and the listing requirements of the NYSE.
XII. Amendments to this Code
Any amendment to this Code shall be made only by the Board. If an amendment to this Code is made, appropriate disclosure will be made within two business days after the amendment has been made in accordance with legal requirements and the listing requirements of the NYSE.
XIII. Posting Requirement
The Partnership shall post this Code on its website as required by applicable rules and regulations. In addition, the Partnership shall disclose in its Annual Report on Form 10-K, that a copy of this Code is available both in print to any unitholder who requests it and on the Partnership’s website, which address the Partnership shall provide.
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This document states a policy of Azure Midstream Partners, LP and is not intended to be regarded as the rendering of legal advice.
I have read and understand the Corporate Code of Business Conduct and Ethics (the “Code”) of Azure Midstream Partners GP, LLC (the “Company”), acting on behalf of the Company in its capacity as the general partner of Azure Midstream Partners, LP (the “Partnership” and, together with the Company, the “Partnership Group”). I agree that I will comply with the policies and procedures set forth in the Code. I understand and agree that, if I am an employee of the Partnership Group or one of its subsidiaries or other affiliates, my failure to comply in all respects with the Partnership Group’s policies, including the Code, is a basis for termination for cause of my employment with the Partnership Group and any subsidiary or other affiliate to which my employment now relates or may in the future relate.
In addition, I agree to promptly submit a written report to the Partnership Group’s Chief Financial Officer describing any circumstances in which:
I am unaware of any violations or suspected violations of the Code by any employee except as described below or on the attached sheet of paper. (If no exceptions are noted, please check the space provided below.)
_____ No exceptions
To the best of my knowledge and belief, neither I nor any member of my family has any interest or affiliation or has engaged in any activity that might conflict with the Partnership Group’s interest, except as described below or on the attached sheet of paper. (If no exceptions are noted, please check the space provided below.)
_____ No exceptions
I am aware that this signed Certification will be filed with my personal records in the Partnership Group’s Human Resources Department.
Directors, officers and other employees must work together to ensure prompt and consistent action against violations of the Code. However, a director, officer or other employee may encounter a situation in which it is difficult to determine how to proceed while also complying with the Code. Since not every situation that will arise can be anticipated, it is important to have a way to approach a new question or problem. When considering these situations, a director, officer or other employee should: